Many economists believe that what has been a slow growing U.S. economy is entering recession, an outright decline in economic activity.

It is the end of the third quarter, a time for squaring financial records and reflecting on the three months just passed. The stock market fell sharply in the quarter, with the Dow Jones industrials down 17 percent, their worst performance since 1987. Business confidence, which has been weak all year, took a further tumble following the terrorist attacks September 11. Consumer sentiment, as measured by the University of Michigan, slid in September, reflecting a deteriorating near-term outlook for the economy.

The commerce department, in its final revision of second quarter economic activity, says the economy grew at an annual rate of .3 percent. That's a slight upward revision from earlier reports. But the sluggish growth of the second quarter is the weakest showing since 1993. And expectations are that things are getting worse. Researchers at the International Monetary Fund say the U.S. economy will probably decline in both the third and fourth quarters, before rebounding in 2002.

Kenneth Rogoff, the IMF chief economist, says, "The conventional recession of having two quarters of negative growth seems to be a significant likelihood. Whether it will be a slight decline or a slight advance, there will be a trough in U.S. growth over two quarters. But whether it is a standard recession is entirely another matter. I think there is every cause for optimism about a V shaped rebound next year."

But the outlook for October, November and December is bleak. With travelers afraid to fly, U.S. airlines have laid off 100,000 workers. The hotel and travel industries are depressed. Corporate profits show little sign of improvement. Analysts say the big car companies - General Motors, Ford and Chrysler - may have their slowest sales in nine years over the next 12 months.

The central bank, the Federal Reserve, is likely to cut interest rates for the ninth time this year when it meets next week. Despite more abundant credit, consumers are reluctant to borrow and there are few positive signs in the short-term outlook.